LYC
Lynas Rare Earths Limited
ASX
Quarterly Activities Report
Sentiment:
Quarterly Report
23 April 2024 6:19 PM
Lynas Rare Earths reports lower Q3 FY24 revenue due to low NdPr prices and strategic inventory holding, but production remains strong and expansion projects are progressing.
Worse than expected
The Q3 FY24 revenue was significantly lower than the previous year due to lower NdPr prices and the decision to hold inventory.
Delay expected
The commissioning timeline for the Kalgoorlie facility has been extended, leading to a budget increase.
Summary
- Lynas Rare Earths reported a quarterly gross sales revenue of A$101.2 million for Q3 FY24, down from A$242.8 million in Q3 FY23 and A$136.2 million in Q2 FY24.
- Total REO production was 3,545 REOt, and NdPr production was 1,724 REOt, matching the previous year's output.
- The average NdPr price was US$47/kg ex VAT during the quarter.
- The company strategically held approximately 500 tonnes of NdPr and all SEG inventory due to low prices.
- The Mt Weld Expansion Project is on track, with Stage 1 commissioning expected in the latter part of the calendar year.
- The Kalgoorlie facility's budget has increased to approximately A$800 million due to an extended commissioning timeline.
- Earthworks at the U.S. Rare Earths Processing Facility in Seadrift are expected to commence by the end of the calendar year, pending approvals.
- Carey Group Holdings was awarded a 5-year mining services contract at Mt Weld, commencing in April 2024.
Sentiment
Score: 6
Explanation: While production remains strong, the lower revenue and increased project costs temper the positive aspects. The strategic inventory holding and future expansion plans indicate a long-term vision, but current market conditions present challenges.
Positives
- NdPr production of 1,724 REOt matched the previous year's output.
- The Mt Weld Expansion Project is progressing as planned.
- The federal NEPA environmental approval was successfully concluded for the U.S. Rare Earths Processing Facility.
- Lynas secured a 5-year mining contract with Carey Group Holdings, a 100% First Nations-owned business.
Negatives
- Q3 FY24 revenue decreased to A$101.2 million due to low NdPr prices.
- The Kalgoorlie facility's budget increased to A$800 million due to an extended commissioning timeline.
- An exceptional rain event in early March forced the shutdown of concentrate production for several days at Mt Weld.
Risks
- Low rare earth prices could continue to impact revenue.
- Commissioning delays at the Kalgoorlie facility could further increase costs.
- Obtaining all necessary approvals for the U.S. Rare Earths Processing Facility could delay earthworks commencement.
- Reliance on external contractors like Carey Group Holdings introduces operational dependency.
Future Outlook
The company expects increased production capacity in the latter part of the calendar year as the Mt Weld Expansion Project Stage 1 circuit is commissioned, and market prices have started to improve in April.
Management Comments
- Excellent production rates, including 1,724 tonnes NdPr, were achieved in the March quarter.
- Market prices have started to increase in April.
Industry Context
The report reflects the volatility in rare earth prices and the strategic decisions companies like Lynas are making to manage inventory and production in response to market conditions; the company is investing in future production capacity.
Comparison to Industry Standards
- Lynas's strategy of holding inventory during low price periods is a common practice among rare earth producers to mitigate revenue impact.
- The increase in the Kalgoorlie facility's budget is not uncommon for large-scale projects, as commissioning and initial production often reveal unforeseen challenges and costs.
- The focus on renewable energy for the Mt Weld Expansion aligns with the growing industry trend towards sustainable mining practices.
Stakeholder Impact
- Shareholders may be concerned about the lower revenue and increased project costs.
- Employees are likely to be impacted by the ongoing expansion projects and operational changes.
- Customers may experience fluctuations in supply and pricing due to the company's inventory management strategy.
- Suppliers and creditors are likely to benefit from the ongoing expansion projects and increased operational activity.
Next Steps
- Commissioning of Stage 1 of the Mt Weld Expansion Project in the latter part of the calendar year.
- Ramping up construction of Stage 2 of the Mt Weld Expansion Project.
- Continuing commissioning and initial production activities at the Kalgoorlie facility.
- Commencing earthworks at the U.S. Rare Earths Processing Facility by the end of the calendar year, pending approvals.
Key Dates
- January 2024: Major electricity outage in Kalgoorlie.
- January 2024: Federal NEPA environmental approval process successfully concluded for U.S. Rare Earths Processing Facility.
- 14 March 2024: Carey Group Holdings awarded 5-year mining contract.
- April 2024: Carey Group commenced on site at Mt Weld.
- 31 March 2024: End of Q3 FY24.
- Late April: SMP works will commence at Mt Weld Expansion Project Stage 2.
- End of Calendar Year: Earthworks expected to commence at the Seadrift site subject to all necessary approvals being in place.
Keywords
LYC
Lynas Rare Earths Limited
ASX
Sector: Materials
Filings with Classifications
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Better than expected
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Annual General Meeting Presentation
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26 November 2024 5:25 PM
Annual General Meeting Presentation
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Worse than expected
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Quarterly Report
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Delay expected
29 October 2024 5:24 PM
Quarterly Report
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ESG Report
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10 October 2024 5:26 PM
Annual Report
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Worse than expected
10 October 2024 5:26 PM
Annual Report
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Better than expected
4 August 2024 8:02 PM
Company Presentation
- The company announced a 92% increase in Mineral Resources and a 63% increase in Mt Weld Ore Reserves.
Better than expected
4 August 2024 6:18 PM
Resource and Reserve Update
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- The contained Dysprosium oxide in Ore Reserves has increased substantially.
- The updated Ore Reserve supports a longer mine life at expanded production rates.
Worse than expected
22 July 2024 6:11 PM
Quarterly Report
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Delay expected
22 July 2024 6:11 PM
Quarterly Report
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- Delays in receiving concentrate due to disturbances to the global shipping industry and kiln maintenance shutdowns impacted downstream production.
Delay expected
11 July 2024 6:25 PM
Missing type for ID: 3288
- ASX:LYC announces a delay.
Delay expected
19 June 2024 7:32 PM
Investor Presentation
- Many new rare earth projects have stalled.
Worse than expected
19 June 2024 7:32 PM
Investor Presentation
- Pricing at surprisingly low levels following strong production growth inside China.
Delay expected
23 April 2024 6:19 PM
Quarterly Report
- The commissioning timeline for the Kalgoorlie facility has been extended, leading to a budget increase.
Worse than expected
23 April 2024 6:19 PM
Quarterly Report
- The Q3 FY24 revenue was significantly lower than the previous year due to lower NdPr prices and the decision to hold inventory.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.